Telecom vendors are always on the hunt for new markets. Electric utilities are an important vertical, but their telecom needs have historically been basic. The prospect of big new investments in smart grid projects raises the prospect of this changing. However, don't expect an overnight gold rush.
While there is no doubt that making electric grids smarter will require big investments, the move is under way in Asia. For instance, one attractive smart-grid application is automating a utility's distribution plan, which helps with fault detection and isolation. Real-time demand management (i.e. flexible pricing) through smart meters is also taking off in some markets. The bandwidth involved is small, though, which limits the telecom vendor opportunity.
But building smart grids will require utilities to rely heavily on vendors for services and systems integration: defining the target network and how to build, operate and maintain it.
For some utilities a smart grid is simply not a priority. Implementing one is a costly, complex process requiring consensus from internal constituents, plus regulators and consumers. Given this, some utilities focus attention elsewhere.
One example is Malaysia's Sarawak Energy. Most utilities are slow growth, especially now that energy conservation is important. But because of new industrial parks, Sarawak Energy expects a roughly fivefold increase in its peak load between 2011 and 2020. Its customer base is also changing drastically: from about 30% industrial in 2010, its load may reach 80-90% industrial by 2020. After this transition, its customer base will prioritize power quality and reliability issues, and a smart grid will come in handy.
China State Power Grid (CSPG) has a number of objectives for its smart-grid investments:
- Improve grid security and stability
- Improve asset utilization and management
- Improve energy efficiency and customer service
- Optimize energy resource allocation over a wide area
Many of CSPG's regional utilities are rolling out trials and live smart-grid projects. This occurs even as they also increase capacity and go green, in part to support local manufacturers' new products (like solar panels). Already, smart meters are being deployed in the millions; upgrades to distribution and feeder plant intelligence are much slower. Meeting demand, going green and supporting local industry seem to be greater goals.
One wildcard in China is CSPG's quiet plans to roll out a national FTTx network, running fiber along the same cables as its power lines. CSPG has no communications license but it has financial heft and political clout, plus rights-of-way. It is one of Asia's few large utilities planning to enter the telecom business as part of the transition to smart grid. This is an interesting opportunity for vendors, though local suppliers have the inside track.
SP Ausnet in Australia appears to be one of the more aggressive, forward-thinking utilities in Asia Pacific when it comes to the smart grid. It started investing in 2007, then expanded it in 2010.
The utility's prime achievement so far is automating its distribution/feeder plant, and significantly improving fault detection and isolation, as well as configuration management.
For the last hundred feet access to the smart meter, SP Ausnet is using Wimax, which it believes is more flexible and has more potential applications than using PLC/BPL or mesh radio. SP Ausnet has found that, even with CCTV video streams, smart-grid bandwidth needs are limited. But SP Ausnet says the services and systems integration are a "big headache". This creates an opportunity for telecom vendors, which are fine-tuning their professional services offerings.
Just don't forget that ABB, Mitsubishi, Siemens, GE and lots of other vendors more familiar to utilities are also shopping solutions around.
Matt Walker is a principal analyst at Ovum